Filing a state tax extension serves to inform the Oregon Department of Revenue that you will be submitting a state tax return that year. This will save you from being charged a penalty for late filing or payment when you file your return. So, if you know you will not be filing on time, you need to complete an extension request. You should only file an extension when you have a legitimate reason for doing so. The Oregon Department of Revenue may reject your request if your reason is invalid.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf 

If you have already received a federal income tax extension, you will automatically receive an Oregon extension if you do not owe any taxes this year. This means that you will need to assess your tax liability to see if you need to submit a request. If your extension is approved, you will receive an extra six months to file your Oregon state return.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf

Before you begin filing your extension, you should gather all of the relevant tax information you would need to file your state return. This will help you to properly figure your tax liability (see Step 2). You will need the following to calculate your taxes owed:

1. Documentation of your earned income for the year that is taxable in Oregon, such as wages, tips, commissions and salaries
2. Documentation of your unearned income that is taxable in Oregon, such as unemployment compensation, lottery winnings or annuity payments
3. The total amount of state income taxes that you paid during the year - If you are employed, this will be shown on your Form W-2 or Form 1099 as "state tax withheld". If you are self-employed, this will be the total of any estimated tax payments you made during the year.
4. A copy of your federal income tax return, if you are filing one

Since you need to assess your Oregon tax liability, you will need a paper copy of Form 40-S "Oregon Individual Income Tax Return" as well as the accompanying form instructions. You can obtain this form by downloading it from the Oregon Department of Revenue website or by picking up a paper copy at your local library.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf

You will begin this form with the amount of your federal adjusted gross income, or AGI. If you are not filing a federal income tax return, you may want to consult a tax professional to help you to calculate your federal AGI.http://www.irs.gov/pub/irs-pdf/f1040.pdf 

To complete an extension request, you will need all of the following:

1. Your Social Security number
2. Your complete mailing address
3. Your spouse/domestic partner's name and Social Security number, if you are filing a joint tax returnhttp://www.oregon.gov/DOR/forms/personal/form_40_ext_101-165_2010.pdf
   

Now that you have all of the essential tax information you need, you can assess your tax liability. This is the amount of tax that is owed on your total income that is subject to taxation in Oregon. You will use this to assess if you will have a balance due to remit.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf 

To start, take out your Form 40-S instructions. Read them carefully to see if you will be needing to make any adjustments to income or if you will qualify to claim any state credits that are available to you.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf 

Begin the form by entering your federal AGI. The return will tell you where to find this information on your IRS Form 1040. Then work through the return, adding and subtracting any appropriate income adjustments. If you need further explanation of any line directions, stop and check the form instructions for additional information.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-044-10.pdf 

After you arrive at your total taxable income, you will need to consult the tax tables located in the instructions to assess the amount of your tax liability. Then, subtract your state tax payments, such as withholding or estimated tax payments, from this amount. What is left will be an overpayment or an underpayment. If you overpaid, you will be entitled to a refund. If you underpaid, you will have a tax balance due to pay.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf

Once you figure your taxes owed, you can complete the extension request. In Oregon this form is Form 40-EXT "Application for Automatic Extension of Time to File Oregon Individual Income Tax Return". This form can also be downloaded from the DOR website or obtained at your local library.http://www.oregon.gov/DOR/forms/personal/form_40_ext_101-165_2010.pdf 

It is important to note that, if you are entitled to receive a refund, you will not need to file the extension request. You will have up to three years to file this tax return and still receive your refund. You only need to complete this form if you owe a balance due.http://www.oregon.gov/DOR/forms/personal/form_40_ext_101-165_2010.pdf 

Begin the form by entering your name and Social Security number and your spouse/domestic partner's name and Social Security number, if applicable. Complete the address section and write in your daytime telephone number. Now, you can use the attached worksheet if you need to check the figures you calculated in step 2.http://www.oregon.gov/DOR/forms/personal/form_40_ext_101-165_2010.pdf 

Receiving a tax extension does not extend the deadline to make your payment. When you know that you will have to remit a balance due with your return, you should send a check or money order for the amount along with your extension form. You can also choose to pay your balance via credit or debit card by following the instructions on the extension request.http://www.oregon.gov/DOR/forms/personal/form_40_ext_101-165_2010.pdf

Be sure to submit your payment and your extension request by April 18, 2011. After you do this, you should begin working on your Oregon tax return immediately to avoid last minute filing.http://www.oregon.gov/DOR/PERTAX/docs/2010Forms/101-043-10.pdf Consult a tax advisor if you need additional assistance with your tax return.